A Budget With An Eye On Elections

Nirmala Sitharaman’s messaging was clear when she presented a well-balanced Budget with an eye on state elections in nine states followed by a general election next year, observes Ramesh Menon.

The last full Budget before the 2024 general elections was sculpted well to give an overall feel-good feeling to all sections of society. It kept fiscal levels and targets to manageable levels.

It was engineered to work well during election rallies as nine states go to polls this year followed by a general election.

It aimed to add jobs through capital spending, cut tax rates hoping that the middle class will spend more and get the wheels of the economy moving again.

It attempted to boost infrastructure growth to unleash investment, green energy spread, credit guarantees for small businesses, concessions for women, better interest rates for senior citizens, sops for youth, and schemes for tribals.

There was something for almost everybody.

Even the rich got sops. Those with high incomes who were paying 43 per cent tax, will now only shell out 39 per cent.

It is a good idea to increase capital expenditure as it will raise more revenue and boost the economy.

Sitaraman increased it to Rs 10 lakh crore. This was more than double the allocation of Rs 4.39 lakh crore in 2020-2021.

Infrastructure will get a boost. It would hopefully have a multiplier effect on the economy and create jobs.

There has been a lot of anger and unease with the rising reality of unemployment.

States would get a share of Rs 1.3 trillion out of this to focus on their growth which would be a given as an interest free loan for 50 years.

This will be used to flag off criticism that the Centre is not funding the states as much as it should.

Tax payers were edgy as no tax rebates were offered for the last six years.

The fact that those who opt for the new tax regime will not have to pay tax if they earn less than Rs 7 lakhs will bring smiles to many faces.

To encourage millions to get out of the old tax regime, better tax slabs that can lead to savings was introduced.

The government plans to use the disinvestment route to mop in more revenue of Rs 51,000 crore by selling its stake in state-run firms.

In the past, the government has not had a smooth run with divestment. Will it succeed this time?

The automobile industry that was reeling after the pandemic may see happier times as the government plans to replace old government vehicles and also help electric vehicle segment grow.

Women can now take advantage of a new small savings scheme offering a fixed return of 7.5 per cent. But the rider is that this is only for two years.

If Sitharaman had done it for just one year, it would have been obvious that it was done to create optics before elections.

As India faces renewed threats from China and Pakistan, the defence allocation has been increased to Rs 5.94 trillion that will be used for new weapons, fighter aircraft, warships, missiles and land systems.

No one can quarrel with that in the present circumstances as borders are tense.

The Railways which were crying out for modernisation can heave a sigh of relief now with an allocation of Rs 2.40 lakh crore that is around nine times more than what it got a decade ago. Last year, it was just Rs 1.4 lakh crore.

If all works well, we may soon see hydrogen powered trains, semi-high speed trains and the completion of India’s only bullet train between Mumbai and Ahmedabad.

As much as Rs 40,184 crore will go just for the bullet train project.

It is unlikely that it will be financially viable, but it is Prime Minister Narendra Modi’s pet project.

Clearly, polls were on Sitharaman’s mind while formulating the Budget.

Rs 15,000 crores were allocated for tribal development that was five times more than last year’s allocation.

Tribals are going to be instrumental in the election results in numerous states which have a huge tribal population.

The states of Meghalaya, Mizoram, Nagaland have over 85 per cent tribal population while Chhattisgarh and Tripura have more than 30 per cent.

Madhya Pradesh, a mainline state that goes to the polls this year, has a tribal population of 20 per cent.

Many of the envisaged tribal development schemes are expected to be kicked off as soon as possible to create a hype before polls are announced.

The Upper Bhadra Project in poll-bound Karnataka gets an allocation of Rs 5,300 crore.

It will certainly be a talking point at the BJP’s election rallies as water has been a sensitive issue in the state that goes to polls in a few months.

This will come in handy as the party faces a tough election contest as there are numerous allegations of corruption and poor governance that the present state government is battling.

One area where the Budget faltered was not giving enough attention to agriculture.

This sector has grown by around 3.5 per cent annually ever since the Modi government took charge.

It grew at the same rate during the previous Manmohan Singh regime.

Let us not forget that India is essentially an agriculture economy employing 4.5 percent of the country’s workforce.

It deserved more attention as farmers struggle to survive.

In the coming three years, the government plans to facilitate one crore farmers to adopt natural farming and will set up 10,000 Bio-Input Resource Centres.

However, transiting to organic farming is a complex process and will take a lot of time and effort.

Chandra Bhushan, President & CEO, International Forum for Environment, Sustainability and Technology, said for the first time, green growth had been enunciated as a pillar of development and it would help in ensuring sustainability in agriculture and transiting to green energy.

The Indian economy is bound to be affected by the global slowdown, which would impact domestic manufacturing and exports.

Higher prices for fuel and commodities will trigger higher inflation.

No one can predict how long the war in Ukraine will last. It is not an easy time.

The global economy is in turmoil with geopolitical tensions threatening to disrupt growth, energy supplies and trade.

There was a sense of confidence in the way budget was designed this time. The government clearly wanted to boost growth and at the same time work at fiscal consolidation.

Industry experts hope that the increase in capital investments trigger off the kind of growth that India needs at this juncture.

If everything goes according to the estimates, India will stand out as the global scenario today is bleak.

Investors will not invest in a country riven by factionalism, communalism, politics of hatred, attacks on democratic institutions and lack of justice.

Good prudent governance that is devoid of narrow divisive politics can encourage investors both from India and outside.

India today stands on the cusp of emerging as a bright spot among the world’s big economies. Let us not blow that golden opportunity.

• Budget 2023

Ramesh Menon, award-winning journalist, educator, documentary film-maker and corporate trainer, is the author of Modi Demystified: The Making Of A Prime Minister.

Feature Presentation: Aslam Hunani/Rediff.com

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